Aviva 2013 Annual Report Download - page 300

Aviva plc
Annual report and accounts 2013
298
Shareholder information continued
United States
During part of 2013 we wrote life and annuity business in the
United States through Aviva USA Corporation (Aviva USA),
which was a wholly owned subsidiary formed by the merger of
Aviva Life Insurance Company of America with AmerUS which it
acquired in July 2006. Aviva USA was domiciled in Iowa and
was the holding company for Aviva Life and Annuity Company
which was licensed to conduct business in all states except New
York and Washington D.C. In New York it operated a wholly
owned subsidiary, Aviva Life Insurance Company of New York.
Aviva plc reached agreement, in December 2012, to sell Aviva
USA and the sale was completed in October 2013.
The US insurance industry is regulated primarily on a state-
by-state basis. Individual states have authority to pass statutes,
adopt regulation or issue directives to regulate insurance
activities within their jurisdiction.
Consequently, life insurance companies are subject to
regulation both in their domicile state as well as in each state
in which they operate. State regulation can vary from state to
state. All have laws and regulations covering the financial
aspects of the insurance business, including standards of
solvency, reserves, reinsurance and capital adequacy. In
addition, most states have specific regulation governing
licensing and the conduct of selling agents as well as the
approval of products and associated product forms
and literature.
Canada
We write property and casualty business in Canada via a
number of wholly owned companies.
Insurance business in Canada is regulated federally by the
Office of the Superintendent of Financial Institutions (OSFI) for
prudential supervision (i.e. capital adequacy, solvency, etc). OSFI
derives its powers from the federal Insurance Companies Act
(Canada) which governs the structure and operation of federally
incorporated insurance companies.
The capital adequacy of insurance companies is monitored
under the Minimum Capital Test (‘MCT’), a risk-based
framework allowing for capital to be assessed on the basis
of an individual company’s risk profile taking account of the
investments held and insurance business being written.
Companies have their own internal MCT target that is
communicated to OSFI, which is set to ensure that they
maintain capital in excess of 150% of the OSFI minimum
requirement.
Market conduct regulation is conducted at the provincial
level through ten independent provincial regulators. Those
regulators derive their powers from insurance acts enacted by
provincial legislatures. Market conduct regulation focuses on
personal lines products and business practices, including rating
formulas, underwriting and policy terms and conditions.
Commercial lines insurance is not subject to similar regulations.
Asia
We operate in Asia through a network of subsidiary
companies either wholly owned or established as a joint
venture with a local partner. Our business is predominantly
long-term and savings business, with small general insurance
and health operations.
There are wholly owned businesses in Singapore and Hong
Kong. During 2013 Aviva also operated businesses in China,
India, Malaysia, Taiwan, Korea, Indonesia and Vietnam which,
depending on the nature and extent of the control exerted by
Aviva, were accounted for as subsidiaries, joint ventures or
associates. The business in Malaysia was sold in April 2013.
The Asia area is made up of a number of widely differing
and independent markets. The markets tend to be at different
stages in their development but each has its own regulatory
structures and Aviva complies with the local regulation in each
of the countries in which it operates.
Industry regulation typically focuses on financial stability, i.e.
minimum capital and the basis for calculating solvency, reserves
and policyholder liability. In many of the markets regulators
have the power to revoke operating licences, regulate
shareholder structures and the participation in and the payment
of dividends. Asia markets are moving quickly to modernise
insurance regulation with an increasing focus on governance
and conduct of business.
Intellectual property
Our primary brands (the Aviva name and logo) are registered
trademarks in the UK and are registered or pending in all other
countries where Aviva has operations.
Aviva has an active programme of review of marks and
watching for infringements. There are no material infringements
in the UK known to us as at the date of this report, either by the
Group or third parties.